TIA Section A - Feldblum: Surplus

Question 1

2 definitions of surplus:

Answer 1

1. Balance Sheet definition: surplus = assets - liabilities
2. Income Statement definition: surplus = prior years surplus + current year’s income

Question 2

2 Accounting Methods for Non-admitted assets:

Answer 2

1. Method 1: write off the non-admitted assets as an expense (in the income statement)
2. Method 2: classify the asset as non-admitted & charge surplus directly.

Question 3

Non-admitted portion of Interest Due & Accrued:

Answer 3

Interest Due & Accrued over 90 days overdue is a non-admitted asset.

Question 4

Non-admitted portion of Accrued Retrospective Premium:

Answer 4

10% of the unsecured Accrued Retrospective Premium is non-admitted.

Question 5

Non-admitted portion of Real Estate:

Answer 5

The permanent excess of book over the market value is a non-admitted asset